Double-Jointed Diplomacy

ByRuth WedgwoodAugust 1, 1996

Diplomacy is not just for diplomats anymore. Double-jointed economic structures are taking on some difficult issues in international relations. Economic co-ventures have provided quiet places to float political test balloons and cross-leverage the issues.

The Korean Peninsula Energy Development Organization (KEDO) is the newest example of political cross-dressing. KEDO is tasked to put on-line a safer power source for North Korea. KEDO is raising $4.5 billion in long-term loans to build two US-origin-design light-water nuclear reactors. The loan money will come from Japan and South Korea, with design adaptation and plant construction handled by South Korea's Electric Power Company.

North Korea has agreed, in exchange, to mothball and dismantle its two Soviet-style gas graphite nuclear reactors, and to dispose of existing spent nuclear fuel without in-country reprocessing - cutting the danger that spent fuel could be diverted to refining weapons-grade plutonium. Pending construction, fuel-oil substitutes will be financed by the United States, South Korea, Japan, Australia, Canada, Finland, Indonesia, and New Zealand, along with non-KEDO states. Congress, however, has spooked our partners by approving only $13 million of the $25 million pledged for the US share this year.

North Korea has never signed a peace treaty to settle the Korean conflict and has no diplomatic relations with Japan, South Korea, or the US. Against this backdrop of isolation and hostility, KEDO is a diplomatic breakthrough. For the first time, Japanese and South Koreans have the occasion to sit at a table with North Koreans, discussing practical problems. On July 24, Japan, South Korea, and the US built on KEDO's momentum to try to persuade North Korea to join quadrilateral talks to discuss a permanent peace regime on the peninsula.

Latin America provides another example of economics as the new driving force. MERCOSUR is the Southern Cape Common Market - Brazil, Argentina, Paraguay, and Uruguay (Chile and Bolivia are joining too). It's proved its worth as an international escrow fund for democracy and political stability. Paraguay was the test case. In April, the local military began to resist the authority of Paraguay's first democratically elected president, Juan Carlos Wasmosy. Paraguay's MERCOSUR partners warned the general that the old ways were over and a coup would damage Paraguay's investment prospects. The coup stopped.

To be sure, there is a new political ethos in Latin America, celebrating emergence from a long history of military rule. The Organization of American States declared in the 1991 Santiago Declaration that democracy is a common concern. In 1992 the OAS proposed that when democracy is overthrown, a state should be suspended from participation in the regional group. But the OAS has traditionally been a toothless organization. The difference in Paraguay is the clout of economic partners.

The US-Iran Claims Tribunal at The Hague is a final example. The tribunal handled thousands of claims between the US and Iran for injuries suffered in Iran's convulsive revolution under the Ayatollah Khomeini. For two national antagonists who spurn diplomatic relations, The Hague also allowed quiet contacts to discuss political controversies such as the status of hostages in Lebanon. The Hague tribunal is kept running, in large part, because it allows each government a discreet and useful back channel for communications.

Edward Gibbon, the British historian, believed that commerce would stimulate political civility. These double-jointed structures fit the bill.

*Ruth Wedgwood is senior fellow at the Council on Foreign Relations and Professor of Law at Yale Law School.